Envestra purchase fuels NSW push

Natural gas distributor
Envestra
is expanding in NSW with the acquisition of Country Energy’s gas networks business for $107 million including debt, extending the shakeout in Australia’s infrastructure and utilities assets.

The deal will be funded through a mix of debt and equity, with a ratio between equity and debt of 61 per cent, lower than the 73 per cent gearing ratio of Envestra’s existing business, Envestra said Tuesday in a statement. Commonwealth Bank of Australia is providing the debt finance.

The acquisition will give Envestra some 1160 kilometres of gas distribution pipelines and 65 kilometres of transmission pipelines in southern NSW, with deliveries of about 3 petajoules a year to a total of 26,000 gas consumers. The operations are centred in Wagga Wagga.

Envestra said it expects Gas Networks to deliver revenues in 2011-12 of more than $14 million and earnings before interest, tax, depreciation and amortisation of between $10 million and $11 million. The business has “attractive" growth opportunities, it said.

The acquisition, while relatively small, “demonstrates Envestra’s prudent approach to growing the company through investments that utilise our core competencies," managing director Ian Little said. It will add to Envestra’s cash flow and profit from the first full year of ownership, he said.

Envestra is being advised by Core Energy and Gryphon Partners, with Johnson Winter & Slattery on the legal side.